Canadian Dollar gains support from higher oil prices amid Saudi pipeline disruptions
USD/CAD halts its three-day winning streak, trading around 1.3870 during Asian hours on Monday. The pair inches lower as the commodity-linked Canadian Dollar (CAD) receives support from elevated oil prices.
The Canadian Dollar (CAD) experienced a temporary setback on Monday, trading near 1.3870 amid a three-day upward trend. The Canadian Dollar benefitted from higher oil prices following a drone attack that forced Saudi Arabia to temporarily halt a major crude pipeline. This disruption impacted a crucial route used to bypass the Strait of Hormuz.
Analysts at Scotiabank attribute some support to front-end US/CAD spreads that have remained stable despite increased focus on US rate policy. However, the USD/CAD pair could rebound if the US Dollar gains strength due to expectations of a rate hike by the Federal Reserve following higher US inflation reports. The US Consumer Price Index (CPI) rose by 0.4% month-over-month in August, hitting a 3.4% annual increase, which aligns with market expectations.
The Bank of Canada (BoC) plays a significant role in determining the CAD's value through interest rate adjustments aimed at maintaining inflation at 1-3%. Canada's economy and its trade balance, which reflect the difference between exports and imports, also influence the CAD's performance.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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